The Interview… Gerard Boon, managing director at Boon Brokers

Gerard Boon, managing director at Boon Brokers shares insights on the financial impact of redundancy in the mortgage market.

Could you elaborate on the current trends you’re observing in the mortgage market as a result of rising redundancy rates?

We have certainly observed more panic and concern from existing clients regarding their remortgage options due to greater uncertainty in their employment. 

The UK’s economy is delicate at the current time due to the poor business environment created by Government policy, so we expect this concern to rise from existing clients. 

Can you share any specific examples or anecdotes that illustrate the challenges families are facing when dealing with mortgage repayments after redundancy?

Following redundancy, families could be hit with a double whammy cost predicament. 

Firstly, they will have lost an income, which could result in defaults on their mortgage repayments. 

If defaults persist, the borrower’s credit file will be adversely affected, resulting in great difficulty to refinance to a low interest rate when they do find new employment. Or worse, frequent defaults could result in their property being repossessed by the lender. 

Secondly, following redundancy, borrowers may be unable to refinance which would result in their mortgage switching to the lender’s Standard Variable Rate (SVR). 

The SVR is often far higher than the lender’s product interest rates, which creates further costs for the borrower. 

For those facing redundancy, what are some specific challenges or hurdles they encounter when attempting to remortgage?

For those who have been made redundant, they are unable to prove an ongoing income to the mortgage lender. 

If borrowers cannot prove a sufficient ongoing income to the lender that fits their affordability criteria, they will be unable to remortgage. 

As a result, they will be stuck on the lender’s SVR when their existing mortgage product expires. 

A common misconception from clients is the belief that their mortgage payment history will work in their favour when remortgaging. 

Unfortunately, their payment history is not a consideration for mortgage lenders when they review remortgage applications.

Can you explain how product transfers work and how they can benefit affected homeowners?

Product transfers occur when a borrower switches their mortgage product with the same mortgage lender. 

Product transfers are not guaranteed, but they are often offered by mortgage lenders, especially the well-known high street brands. 

Product transfers may still be available for those who are made redundant, at the lender’s discretion. 

This is to prevent their clients from becoming mortgage prisoners, where borrowers are stuck paying a SVR that is higher than other deals offered by the same provider. 

What advice would you offer to homeowners who are worried about potential job loss and its impact on their mortgage repayments?

Speak with a whole of market broker, like Boon Brokers, as soon as possible. 

The old adage “if you fail to plan, you plan to fail, rings true with regards to the mortgage industry. 

Our advisers can ensure that you are well informed about your options if you are made redundant. 

Have you noticed lenders becoming more flexible or supportive in structuring payment plans for clients affected by redundancy?

There has been no obvious support offered by lenders following redundancy, aside from the offering of Product transfers. 

Given the state of the UK economy, there should be more thought given to support people those facing the prospect of redundancy. 

How can mortgage brokers support individuals facing financial instability due to job loss, and what role does Boon Brokers play in this scenario?

Brokers should be supportive of those facing financial hardship.

At Boon Brokers, we offer a fee-free service to help those in needs of advice.

What long-term effects do you anticipate on the mortgage market if redundancy rates continue to rise at the current pace?

Unfortunately, we expect adverse credit to increase nationwide as a result of increasing redundancy. 

Following redundancy, it will be very difficult, if not impossible, for people to maintain their mortgage repayments until they find work elsewhere.